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Apple’s Growth Slows as it Sets New Product Expectations for Late 2013

  |  April 24, 2013   |  Comments

Move your marketing budgets and discretionary spend for the next iPhone or any new Apple products to the fall at the earliest. Apple's chief executive Tim Cook essentially said as much as he vigorously defended the company on its latest earnings call, and shared his frustration with Apple’s declining market value in the stock market, which has wiped out 27 percent of its total value in the last year.

Move your marketing budgets and discretionary spend for the next iPhone or any new Apple products to the fall at the earliest. Apple's chief executive Tim Cook essentially said as much as he vigorously defended the company on its latest earnings call, and shared his frustration with Apple’s declining market value in the stock market, which has wiped out 27 percent of its total value in the last year.

Apple is no longer riding the phenomenal growth waves it experienced in 2012, but it still beat the street’s expectations for its recently closed quarter. The company scored $9.5 billion in profit on $43.6 billion in revenue in the quarter, but also posted its first quarterly drop in profit since 2003. Apple sold more iPhones (37.4 million), iPads (19.5 million) and nearly the same number of Macs (4 million) during the quarter, but it is also being squeezed by tighter margins, especially on the iPad Mini. The company also blamed higher-than-expected iPad sales for the tighter margins, adding that the device is now being used in 95 percent of the Fortune 500 and 89 percent of companies in the global 500 ranking.

Apple expects revenue and margins to get worse in the current quarter, but shared optimism about its plans for the end of 2013 and 2014.

“Our teams are hard at work on some amazing new hardware, software and service that we can’t wait to introduce this fall and throughout 2014. We have a tremendous culture of innovation with a relentless focus on making the world’s best products that change people’s lives. This is the same culture and company that brought the world the iPhone and the iPad, and we’ve got a lot more surprises in the works,” says Cook.

Cook also hinted at Apple’s interest in “new product categories,” which suggests the company might finally be ready to break into the television market or reveal its much-rumored watch product.

“We can’t control items such as exchange rates and world economies, and even certain cost pressures, but the most important objective for Apple will always be creating innovative products. And that is directly within our control,” Cook comments.

“We see great opportunities in front of us, particularly given the long-term prospects of the smartphone and tablet markets, the strength of our incredible ecosystem which we plan to continue to augment with services, our plans for expanded distribution, and the potential of exciting new product categories,” he adds. 

ITunes, software and services accounted for almost 10 percent of Apple’s revenue during the quarter. The App Store is now operating in 155 countries while iTunes music stores are open in 119 countries. Apple ended the quarter with 402 stores, 151 of which are outside the US, and an average revenue per store of $13.1 million. Apple hosted more than 91 million visitors to its stores during the quarter, which breaks down to an average of 17,500 visitors per store every week.

Finally, Apple tried to further calm investors’ nerves by announced the largest share repurchase program in history. With a pile of cash hovering around $145 billion, Apple announced a 15 percent increase in quarterly dividends and plans to expand its share buyback program from $10 billion to $60 billion.

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ABOUT THE AUTHOR

Matt Kapko

Matt Kapko has been writing about mobile since 2006, before it became cool. Based in Long Beach, CA, he has covered mobile entertainment, digital media, marketing, and advertising for several business media outlets. A former editor and reporter for RCR Wireless News, paidContent, and iMedia Connection, Matt is a regular freelance reporter for ClickZ. You can follow Matt on Twitter at @MattKapko or drop him a line at matt@kapko.co.

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